Following the announcement that the brand was potentially writing off its remaining Yeezy inventory, adidas has decided. The brand has officially announced that it will sell its remaining Yeezy inventory.
The partnership between Ye (formerly known as Kanye West) and adidas, marked by the Yeezy brand, was once a hallmark of success in the footwear industry. Comparable to the acclaim of Jordan Brand, Yeezy evolved into a billion-dollar venture, with both parties reaping the rewards from this venture. However, the relationship soured over time, leading to its eventual collapse following Ye’s controversial actions, including his "White Lives Matter" shirt at the Yeezy Season 9 fashion show and anti-Semitic rhetoric.
This fallout placed adidas in a challenging financial position, as the brand heavily relied on Yeezy for its revenue. adidas took a strategic step after being left with over a billion dollars worth of inventory. They decided to release the existing stock in batches, committing a portion of the proceeds to the Anti-Defamation League and the Philonise & Keeta Floyd Institute for Social Change. These initial releases were financially successful, accounting for 85% adidas' profits in the second quarter of 2023.
adidas' plan for a subsequent release in November 2023 was postponed due to escalating conflicts in the Middle East. Weeks later, adidas contemplated writing off approximately $320 million worth of Yeezy sneakers. However, in a recent turn of events, as per their 2023 preliminary results, adidas opted not to write off most of the Yeezy inventory. Instead, they plan to sell the remaining products “at least at cost” in 2024.
Despite a challenging year, adidas' performance exceeded expectations. The company reported flat currency-neutral revenues compared to the previous year, a significant achievement considering the discontinuation of the Yeezy line. The gross margin also improved, and the company generated an operating profit of €268 million, surpassing its anticipated operating loss.
As adidas looks ahead to 2024, it anticipates a mid-single-digit rate growth in currency-neutral sales, including around €250 million from the sale of remaining Yeezy inventory at cost. This strategy aligns with their goal of returning to double-digit growth and a 10% operating margin. adidas CEO Bjørn Gulden expressed optimism, highlighting improvements in consumer engagement, product quality, and reduced inventory levels.
When precisely the next Yeezy drop is set to take place is still a mystery. Download the Sole Retriever mobile app to stay updated on the remaining adidas Yeezy inventory and more in the sneaker and streetwear world.